As of September 2024, India's external debt has surged to $711.8 billion, a significant increase from $637.1 billion in September 2023, marking a 4.3% rise since June 2024. This escalation has also led to an increase in the debt-to-GDP ratio, which climbed from 18.8% to 19.4% during the same period [1bd05cd7].
A striking 53.4% of this debt is denominated in US dollars, highlighting India's heavy reliance on dollar-based borrowings. The composition of the external debt reveals that loans constitute 33.7% of the total, while currency and deposits account for 23.1%, trade credit for 18.3%, and debt securities for 17.2% [1bd05cd7].
The burden of debt servicing has also intensified, now representing 6.7% of current receipts. This situation raises concerns about exchange rate vulnerability and the increasing pressure of debt servicing on India's economy [1bd05cd7].
In light of these challenges, experts are advocating for strategic actions to manage the external debt sustainably. Recommendations include diversifying borrowing sources, boosting export revenues, and enhancing transparency in debt management practices [1bd05cd7].